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Gas, Coal Conversion Projects Gain Funding

June 29, 2012 — A proposal to study the conversion of natural gas to
liquid fuels and chemicals, and a plan to convert coal to gas, liquids and
other products, are on track to receive funding from the state of Wyoming.

Wyoming's Clean Coal Task Force which, on July 1,
will become the Advanced Conversion Technologies Task Force, selected the two
proposals from among 14 applications.

The task force directs the University of Wyoming
School of Energy Resources (SER) in administering the state's Clean Coal
Technology Research Account which, on July 1, will be renamed the Advanced
Conversion Technology Research Account. The name changes were made by the 2012
Wyoming State Legislature, reflecting the program's broadening scope to include
conversion of other minerals besides coal into value-added fuels and products.

Among other research programs, the Legislature
appropriated $500,000 to fund the study of technologies to “move Wyoming minerals
up the value chain.” The 14 applications received for that funding totaled
$2.47 million, SER officials say. Ten reviewers evaluated two to three
proposals each, and each proposal had at least two independent reviewers. The
task force met June 18 to review and evaluate the proposals.

The two proposals accepted and moved to contract
negotiations are:

Western Research Institute (WRI), Laramie,
$162,000 to study production of liquid fuels and chemicals from stranded
natural gas.

While previous studies have shown that
gas-to-liquids facilities must be quite large to succeed commercially, recent
technological breakthroughs have made it possible for such facilities to work
on a smaller scale, WRI officials say. That provides an opportunity for
Wyoming, where the ability to convert gas at the point of production in remote
locations is especially important.

The goal of the proposed study is to identify an
optimum size for a gas-to-liquids facility for Wyoming natural gas resources.
Development, demonstration and deployment of appropriately sized gas-to-liquids
plants “would enable Wyoming gas producers to enter the multitrillion-dollar
market for fuels and chemicals,” WRI’s proposal says.

ARCTECH Inc., based in Virginia, $329,243 to study
coal conversion at “biorefinery” plants in Wyoming.

ARCTECH has a process to convert coal to gas and
liquid fuels, along with products used in wastewater treatment. The company
says the process can be used for coal that has been mined, as well as below
ground in deep coal seams.

ARCTECH plans to conduct the study in collaboration with
Arch Coal Inc., one of Wyoming’s biggest coal producers.

Contracts for the two conversion projects are being
finalized.

Meanwhile, the Advanced Conversion Technologies Task
Force is preparing to issue a request for proposals in a separate program
approved by the Legislature, which appropriated $9 million (to be approved by
the governor) for front-end engineering and design on specific projects to
“move Wyoming minerals up the value chain.” It is not necessary for entities
making proposals for that program to have submitted proposals for the first
study fund.

And the task force is currently accepting proposals
for research dedicated to coal conversion technologies. The Legislature
appropriated $10 million for that purpose. Funds for successful proposals in
that program will become available Sept. 15, following selection by the task
force and approval by the Legislature's Joint Minerals, Business and Economic
Development Interim Committee.